Stoneycreek golf course is planning for the coming season. Investors would like to earn a 12% return on the company's $40 million of assets. The company primarily incurs fixed costs to groom the greens and fairways. Fixed costs are projected to be $20 million for the golfing season. About 500,000 golfers are expected each year. Variable costs are about $12 per golfer. Stoneycreek golf course is a price-taker and won't be able to charge more than $60 per round because of local competition.
What will Stoneycreek's revenue be at a market price of $60/round?

Question

Quizplus · Accepted Answer

The Answer of Stoneycreek golf course is planning for the coming season. Investors would like to earn a 12% return on the company's $40 million of assets. The company primarily incurs fixed costs to groom the greens and fairways. Fixed costs are projected to be $20 million for the golfing season. About 500,000 golfers are expected each year. Variable costs are about $12 per golfer. Stoneycreek golf course is a price-taker and won't be able to charge more than $60 per round because of local competition.
What will Stoneycreek's revenue be at a market price of $60/round?

Stoneycreek Golf Course Is Planning for the Coming Season